The Bank of Japan's material lists credit-linked loans, reverse floater loans and CMS loans as examples of structured lending1.

Consider a hypothetical example in which a borrower combines a 1 billion yen floating-rate loan with an interest rate swap in which it pays a fixed 1.5% a year and receives the benchmark rate. When the benchmark rate is below 1.5%, the borrower pays more than without the swap. When it is above 1.5%, the borrower pays less.

The supervisory guidelines of the Financial Services Agency (FSA) list points for banks' explanation systems when a loan includes a derivative transaction such as an option or a swap2.

Notes

  1. Center for Advanced Financial Technology, Financial System and Bank Examination Department, Bank of Japan, "仕組商品投資のリスク把握と管理" (Understanding and managing the risks of investing in structured products, in Japanese), page 3, "１．仕組商品とは" (1. What structured products are), main text and table. ↩

  2. Financial Services Agency, "主要行等向けの総合的な監督指針" (Comprehensive Guidelines for Supervision of Major Banks, etc., in Japanese) (October 2026 [Reiwa 8]), III-3-3-1-2 (2) ① イ (page 217). ↩